Social Security Trust Funds Could Run Short by 2034 Javascript must be enabled to use this site. Please enable Javascript in your browser and try again. × Search search POPULAR SEARCHES SUGGESTED LINKS Join AARP for just $9 per year when you sign up for a 5-year term. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. Leaving AARP.org Website You are now leaving AARP.org and going to a website that is not operated by AARP. A different privacy policy and terms of service will apply.

Social Security Trust Funds Could Run Short by 2034 as Pandemic Takes Toll

Beneficiaries could get reduced payments once reserves depleted unless action is taken

iStock / Getty Images Widespread unemployment last year due to the is a reason why the trust funds that help pay Social Security retirement and disability benefits could run short of money in 2034, one year earlier than previously projected, according to the annual report from the Social Security trustees overseeing the funds. The trustees cited the wide-ranging impact of the pandemic as one of the causes of the earlier date for the shortfall of the Social Security retirement and disability trust funds. Because are funded with money deducted from the paychecks of workers (with additional contributions from their employers), high unemployment means fewer people are contributing to the programs’ coffers. More than 22 million people were out of work in April 2020, and the national unemployment rate remained high until COVID-19 vaccines became widely available earlier this year. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. The trustees also found that increases in deaths, decreases in births, and lower immigration — all due to COVID-19 — also played roles in the analysis that moved the shortfall in the retirement and disability trust funds forward by one year. “The trustees’ projections in this year’s report include the best estimates of the effects of the COVID-19 pandemic on the Social Security program,” Social Security Administration Acting Commissioner Kilolo Kijakazi said. “The pandemic and its economic impact have had an effect on Social Security’s trust funds, and the future course of the pandemic is still uncertain.” “Social Security and Medicare are more crucial than ever for older Americans. Social Security is the only guaranteed source of retirement income, and Medicare provides the critical health coverage that seniors rely on and need,” AARP’s CEO Jo Ann Jenkins said. “Today’s trustees’ reports show that both programs are strong, but there are longer-term funding challenges to contend with. Any discussion about Americans’ earned benefits demands public input and a full and open debate.” AARP Membership — $12 for your first year when you sign up for Automatic Renewal Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. Flowers & Gifts 25% off sitewide and 30% off select items See more Flowers & Gifts offers > There actually are two distinct Social Security trust funds: the Old-Age and Survivors Insurance (OASI) trust fund and the Disability Insurance (DI) trust fund. When looked at separately (rather than the combined analysis used to predict the 2034 date), the OASI trust fund, which pays retirement and survivor benefits, is projected to become depleted in 2033, one year sooner than in the 2020 report. After 2033, it would be able to pay 76 percent of scheduled benefits with continuing tax income. The DI trust fund is estimated to become depleted in 2057, eight years sooner than last year’s report, with 91 percent of benefits still payable thereafter.

Medicare trust funds hold steady

A separate report from the Medicare trustees found that the trust fund that helps cover roughly 61.2 million beneficiaries would run out of money in 2026, the same date projected by last year’s report. Medicare’s Part A Hospital Insurance (HI) trust fund, which pays hospital inpatient expenses, is still projected to be able to pay 91 percent of its scheduled benefits if its trust fund runs out of money in 2026. “Lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare,” the trustees wrote in their 2021 report released on Aug. 31. “Lawmakers should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.” AARP Membership — $12 for your first year when you sign up for Automatic Renewal Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. AARP Membership — $12 for your first year when you sign up for Automatic Renewal Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine. AARP VALUE & MEMBER BENEFITS See more Health & Wellness offers > See more Flights & Vacation Packages offers > See more Finances offers > See more Health & Wellness offers > SAVE MONEY WITH THESE LIMITED-TIME OFFERS